Subsequent Events

6 Months Ended

Jun. 30, 2014

Note G – Subsequent Events

Our Series A Debentures and Bridge Loan with Cantone Asset Management matured on August 1, 2014. As of the date of this report, we are unable to pay back the principal amount of $743,500 related to the Series A Debentures and Cantone Asset Management Bridge Loan (the “Debenture Debt”). We are however able to continue to make interest payments on the Debenture Debt. On July 30, 2014, we entered into a term sheet to engage CRI to solicit existing holders of the Debenture Debt (the “Holders”) to forbear from exercising remedies of default related to the non-payment of principal until February 1, 2015. The principal amount extended is dependent on the desire of the Holders to forbear. The Company can give no assurances that any or all of the Holders will grant the forbearance.

We will pay CRI a fee for assisting the Company in obtaining forbearance from the Holders in the amount of 1% in cash of principal amount held by Holders that agree to the forbearance, and 1% in restricted stock (using a price of $0.12 per share (which is the average closing price of the Company’s common shares for the last ten (10) preceding trading days) to determine the number of restricted shares to be issued. We are also reimbursing CRI's legal fees of $1,000.

As of the date of this report, we have received 19 Forbearance Agreements representing $571,250 of the $743,500 of Debenture Debt. We have been informed that one Holder does not wish to provide forbearance; therefore we will be paying principal in the amount of $20,250 to this Holder. We are in the process of obtaining the additional Forbearance Agreements representing the remaining $152,000 of Debenture Debt.